Abu Dhabi Commercial Bank (ADCB) agreed yesterday to sell its stake in a Malaysian lender to Aabar Investments, reaping a profit of about US$700 million (Dh2.57 billion) after owning the shares for three years.
ADCB, the UAE's third-largest bank, is selling its 24.9 per cent stake in RHB Capital to free up capital. The talks with Aabar were announced last week.
Aabar, which is owned by the Abu Dhabi Government, will pay 10.80 ringgit per share, the companies said in a joint statement. This values the deal at 5.9bn ringgit (Dh7.13bn), based on calculations by Bloomberg. That means ADCB made a 51 per cent gain after acquiring its stake for 3.9bn ringgit in 2008.
"We have benefited tremendously from our ownership of RHB," Ala'a Eraiqat, the chief executive of ADCB, said in the statement. "We are now clearly focused on executing our strategy of being a UAE-centric bank."
RHB, which was overtaken last month by Hong Leong Bank as Malaysia's fourth-largest lender, is the subject of a takeover battle between Malayan Banking and CIMB Group Holdings.
A merger with either of these rivals could potentially create South East Asia's biggest bank by market value.
Malaysian lenders are consolidating amid intensifying competition as more overseas lenders are granted licences to operate in the country. On Wednesday, Bahrain's Elaf Bank became the latest to win an Islamic banking licence.
Yesterday's deal means Abu Dhabi can remain a substantial shareholder supportive of a potential merger, Najib Razak, the Malaysian prime minister, said at a signing ceremony in Putrajaya, outside of the Malaysian capital.
"The sale will result in the release of capital," ADCB said in the statement.
The price paid is an 11 per cent premium to RHB's closing share price of 9.75 ringgit in Kuala Lumpur yesterday.
"We are impressed by the strong performance achieved by RHB," Mohamed Badawy al Husseiny, Aabar's chief executive, said in the statement. "We are excited by the opportunity to potentially participate in domestic consolidation and regional expansion."
Malayan Banking, the country's biggest lender, known also as Maybank, and its largest local rival last month won separate approvals from the Malaysian central bank to begin competing merger talks with RHB.
The combined capitalisation of Maybank and RHB would be $29.2bn, based on yesterday's closing share prices, exceeding Singapore's biggest lender, DBS Group Holdings. CIMB and RHB's joint market value would be $28bn, also higher than DBS's $26.2bn.
The purchase adds to Aabar's rapidly growing portfolio of companies. Aabar, which is controlled by the Abu Dhabi Government-owned International Petroleum Investment Company, has a stake in the German car giant Daimler and Virgin Galactic, Sir Richard Branson's commercial space flight venture.
Aabar also owns part of the Mercedes GP Formula One team and about 5 per cent of UniCredit, one of Italy's biggest banks.
Aabar's total assets are worth more than $10bn, according to financial reports from last year.
* with Bloomberg News